The U.S. Commerce Department says not to worry about offshoring. Everything’s cool. The only reason why the lightbulb factory where you used to work is now in Mexico is because there was demand in Mexico that had to be met. So the factory had to be moved. It had nothing to do with the fact that the new Mexican workers are only paid $2 per hour.

To which I ask: Really?

It’s impossible to ship lightbulbs to Mexico?

The entire American shoe industry was moved to China to supply the local market?

Factories were moved from Silicon Valley to Asia to make computers and gadgets for local consumption?

IBM shipped thousands of programming jobs to India to produce software for the Indian market?

Really?

Then why are there fleets of giant container ships bringing multinational products from Asia to the USA?

Why doesn’t Nike move some production from Asia to the USA to “supply the local demand”?

Because it’s all lies, of course. Orders were handed down to the Commerce Department economists to put lipstick on the offshoring pig. Without the massive profits from global labor arbitrage, how would corporate CEOs be able to justify their astronomical salaries?

But it’s not going to fool anybody. When people spend their unemployment checks, and food-stamp money at the dollar store, they see “Made in China” on just about everything. At least until all products are stamped: “Made in the World” which is an actual WTO effort underway right now.

That will fix everything.

Note: The Department of Commerce report was on the front page of the Wall Street Journal yesterday. Here’s the link.

I am not joking. While Fed-bashing may be all the rage, the fact is that the Fed is the only part of the federal government that is trying to DO something about unemployment, rather than just yapping about it.

Who has the world's largest bank vault door?

The Fed has been given a full-employment mandate by Congress. Full employment for the USA mind you; not China, Mexico, or India. However, Congress did not give the Fed sufficient powers to pursue this mandate. Trade policy, immigration policy, and currency exchange-rate policy all have huge impacts on unemployment, but the Fed has no say at all in those policies.

How is that possible?

When the Fed opened its doors in November 1914, the USA had a nationalist trade policy and a 17% tariff on imported goods. I suppose it was taken for granted that the country would always follow such a policy, and it was therefore not necessary to give the Fed any power over foreign affairs.

Today we have a 1% tariff, have lost entire industries to cheap imports, and our borders are virtually wide-open to mass immigration.

Observing the actions of the Congress, White House, and “Jobs Czar”, a visiting space alien would conclude that the USA was following a deliberate policy of high unemployment.

And that is exactly what is happening.

What would the Fed do if it had power over trade and immigration? I have no idea. But imagine that you are chairman of the Cleveland Fed. Your job is to make sure that the banking system runs smoothly, that checks don’t bounce, that savings are not wiped out in panics, etc. And you also research and report on the industry in your region, providing all kinds of important statistics for economists. Are you happy when you see yet another plant close down and head for Mexico?

What does the chairman of the Cleveland Fed think when he walks by his bank-vault door, which is the largest in the world? Do you think he is happy to watch his territory swirling down the economic drain of history?

My guess is that the Fed’s regional nature makes it more patriotic than the White House or Congress. Regional Fed presidents don’t go to Washington, after all. And since Fed Head’s don’t have to fund political campaigns, they don’t appear to be bribe-able. Beijing and the multinationals campaigned hard against QE2, and I wouldn’t be surprised if they offered huge bribes to the Fed. But Ben Bernanke and the Fed persevered against the pressure and threats, and made what they believed would be good policy for the USA and American citizens.

They should be rewarded for that.

The Fed should be given power over immigration. Maybe they should be able to declare a “jobs emergency” and call a temporary halt to all immigration. Maybe they should be given veto power over trade pacts, and the power to adjust dollar exchange rates with predatory nations such as China.

Now, I’m sure you are shouting at your monitor: “That’s would be totally unconstitutional!”.

But let me ask you this:

Was it constitutional when these powers were given over to the multinationals and their partners in Beijing?

I don’t think so.

Did it strike you as odd when Ben Bernanke visited Fort Bliss in Texas today? At first glance, it was indeed odd. After all, central bankers usually give their speeches in front of a different type of audience.

But this was no typical speech. It was, in fact, a response to Texas Governor Rick “Oops” Perry who threatened to rough-up Bernanke if he ever came to Texas.

The Feds couldn’t just let such a threat pass unanswered. So today, they sent their own message to Perry: “If you want to mix it up, keep in mind that we already have military units stationed in your state, including the 1st Armored Division.”

Abrams Tank at Fort Bliss, Texas.

Maybe you think I’m exaggerating? But there is never a shortage of secessionist talk coming out of Texas. And such talk is becoming more and more credible as Mexico recolonizes Texas, and Texas integrates its economy more and more with Mexico. The emergence of a “Texican” nation on the USA’s southern border is a distinct possibility.

Now think of all the factories that we have sent to Mexico, and imagine Texico nationalizing them and retooling them for war production. Keep in mind that many soldiers died in Iraq because we couldn’t make enough steel to armor their Humvees against IEDs. The fact is that our wide-open “free trade” polices have dramatically degraded our industrial base and left us with questionable military capabilities. Texico could pose a credible military threat.

Geopolitical scientist George Friedman of STRATFOR, says that enemy forces positioned in Texas would be an intolerable threat to the USA. Texas is strategically located in the center of the continent and could project power in all directions. Consequently, Friedman says: “Texas ain’t going anywhere.”

And Bernanke’s seemingly innocuous trip to Fort Bliss today was subtle reminder to Governor Perry of that geopolitical reality.

Note: Perry’s massive Trans-Texas Corridor project would have dramatically increased economic ties with Mexico. It was shot down by the Federal Highway Administration last year.

In the 1950s, the USA’s shoe industry employed over 250,000 workers. Now, it’s gone – along with scores of other industries.

In 1950, the USA brought in 249,187 immigrants. In 2010, while suffering from Great-Depression style unemployment, four times as many immigrants were brought in. Over a million!

Factories have been offshored in order to increase the profits of multinational corporations. Shoes, and thousands of other products, are now made by barely-paid Asian sweatshop workers, as opposed to well-paid American workers. The multinationals pocket the difference.

Immigrants have been brought in to deliberately increase unemployment. Increasing the supply of labor reduces its cost. If you go to a job interview where you are the only applicant, you can ask for more money. But if there are twenty other applicants, then your bargaining power is drastically reduced, right?

Trade policy and immigration policy in the USA are optimized to maximize corporate profits by minimizing your paycheck. But it goes beyond that.

The USA is in a “currency union” with China. The purpose is to keep the dollar strong versus the yuan so that multinationals can purchase vast quantities of sweatshop labor at the lowest possible prices. This currency union is not voluntary. No agency of the US government agreed to it. The currency union is enforced by Beijing and its multinational partners, whose lobbyists make sure that any challenges in Congress are stamped out.

Part of the reason why our economic recovery is so weak is that the Chinese have bought up so many of the new dollars which the patriotic Federal Reserve Bank injected into the economy. Beijing has vetoed our monetary stimulus.

Of course, the multinational corporations who literally own the mainstream media will see to it that the presidential election is about minor issues such as taxes, regulation, debt, etc.

But who cares?

It’s the sovereignty stupid!

I’m talking about economic superpowers here; so that disqualifies the USA. The USA is destined to become a gigantic version of North Korea: militaristic, belligerent, aggressive, with an army we can’t afford, and populated by vast swaths of ignorant impoverished peasants swayed by ridiculous propaganda. Our food-stamp population already doubles North Korea’s entire population (see the chart here). And Colin Powell’s 2003 speech to justify the conquest of Iraq is a prime example of preposterous propaganda.

Germany and China are economic superpowers because they have exchange-rate dominance. The Germans keep their European Union satellites enslaved via the euro. The Chinese have been transferring the USA’s industrial power to themselves via their yuan-dollar currency peg. Consequently, Germany and China have become what are called “surplus nations”, which is a nice way of saying “your rulers”.

Germany and China have trade surpluses because they have been able to tilt the playing field in their favor through currency machinations. Imagine a country like Greece or Portugal that gives up its weak currency and adopts the strong euro. What happens to their trade situation? All of a sudden, their exporters are quoting prices in euros, which means they have to compete head-to-head with the Germans on price. And if they aren’t as efficient as the Germans, then they lose market share.

Traditionally, when a country’s economy was in trouble, they would throw a nation-wide sale by devaluing their currency. By sprinkling extra currency around the world, they made their exports more affordable, enticed foreigners to come for cheap vacations, etc. But German satellites are not allowed to do that; they are not allowed to print euros.

So why don’t struggling EU countries ditch the euro, re-establish their own currencies, devalue, and live happily ever after? You might ask that same question of the USA.

Why doesn’t the USA break the yuan-dollar currency peg, stop the huge whirlpool of industries draining away to China, and restore its prosperity?

While that looks like a political question, I’m starting to believe that it is no such thing; that it is a question decided on a level above national politics. Just recently, we saw Speaker of the House John Boehner state that Beijing’s yuan-dollar currency peg was none of the US Government’s business (see my post here). And a few days ago, we saw German Chancellor Angela Merkel say (story here):

“No one should take it for granted that there will be peace and affluence in Europe in the next half century.”

Was that a threat to EU nations contemplating an escape from the euro? Maybe not, but then again, such things are rarely stated directly. But if there is a threat, then that would explain very nicely why EU countries are lashing themselves with austerity: because an escape attempt would bring even harsher measures.

Germany wins this smackdown because they can enforce stricter discipline than China. For all of their success in draining wealth from the USA, the Chinese still have not figured out how to prevent the USA from printing currency. And that allows the USA to rattle its chains.

China’s biggest problem is Ben Bernanke and the Federal Reserve Bank. The Chinese and their multinational partners have obviously succeeded in purchasing Congress and the White House, but the Fed stubbornly insists on exercising sovereign powers on behalf of the American economy.

While QE2 did not restore robust growth to the US economy, it did force the Chinese to print more yuan to maintain their currency peg. And that created inflation in China, which raised the cost of sweatshop labor, and gave American domestic manufacturers some breathing room.

Without QE2, there would be Chinese officials in Washington right now dictating austerity terms just like the Germans in Athens.

And if a knucklehead like Rick Perry or Ron Paul gets their way with the Fed, then the above outcome will be a done deal.